We face an unparalleled crisis in the Federal Government's ability to do the nation's business. Decades of neglect and outright hostility toward the federal civil service by both political parties, together with the coming loss of experienced people due to an unprecedented number of retirements, will exacerbate problems that the U.S. Government Accountability Office (GAO) has been highlighting for years. While former GAO Comptroller General David Walker called on the U.S. Department of Defense (DoD) to reexamine its extensive reliance on contractors (Walker, 2008), the fact is that the government's ability to provide appropriate oversight of contracts has already reached an alarmingly low level, one that will diminish even further with an unprecedented number of retirements over the next few years. Headlines in The Washington Post such as Pentagon Auditors Pressured to Favor Contractors (Hedgpeth, 2008) highlight both the political pressure that favors privatization of government functions and the poor state of government supervision of contractors. In reporting on the conviction of the Science Applications International Corporation, a multibillion-dollar provider of services to the Federal Government, for making dozens of false and fraudulent claims for payments relating to the Nuclear Regulatory Commission (NRC) work, the Post noted that organizational conflicts of interest are a disease that a decade ago were rare and now in Washington are an epidemic (O'Harrow, 2008). The current situation is the result of a number of factors. Although each of these factors is by itself benign, together they have resulted in a most unfortunate and dangerous situation. This paper reviews these factors and the current situation, and outlines actions that can be taken to revitalize the government's ability to do the nation's business.